ORCL Oracle Corp

ORACLE  CORPORATION

Q2 FISCAL 2024 FINANCIAL RESULTS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

($ in millions, except per share data)

Three Months Ended November 30,

% Increase

% Increase

(Decrease)

% of

% of

(Decrease)

in Constant

2023

Revenues

2022

Revenues

in US $

Currency (1)

REVENUES

Cloud services and license support

$           9,639

74 %

$           8,598

70 %

12 %

11 %

Cloud license and on-premise license

1,178

9 %

1,435

12 %

(18 %)

(19 %)

Hardware

756

6 %

850

7 %

(11 %)

(12 %)

Services

1,368

11 %

1,392

11 %

(2 %)

(3 %)

      Total revenues

12,941

100 %

12,275

100 %

5 %

4 %

OPERATING EXPENSES

Cloud services and license support

2,274

17 %

1,891

15 %

20 %

19 %

Hardware

213

2 %

286

2 %

(25 %)

(27 %)

Services

1,253

10 %

1,181

10 %

6 %

5 %

Sales and marketing

2,093

16 %

2,216

18 %

(6 %)

(7 %)

Research and development

2,226

17 %

2,158

18 %

3 %

3 %

General and administrative

375

3 %

366

3 %

3 %

2 %

Amortization of intangible assets

755

6 %

907

7 %

(17 %)

(17 %)

Acquisition related and other

47

0 %

62

1 %

(23 %)

(24 %)

Restructuring

83

1 %

137

1 %

(39 %)

(42 %)

      Total operating expenses

9,319

72 %

9,204

75 %

1 %

0 %

OPERATING INCOME

3,622

28 %

3,071

25 %

18 %

15 %

Interest expense

(888)

(7 %)

(856)

(7 %)

4 %

4 %

Non-operating expenses, net

(14)

0 %

(71)

(1 %)

(79 %)

(81 %)

INCOME BEFORE INCOME TAXES

2,720

2,144

17 %

27 %

22 %

Provision for income taxes

217

2 %

403

3 %

(46 %)

(48 %)

NET INCOME

$           2,503

19 %

$           1,741

14 %

44 %

39 %

EARNINGS PER SHARE:

Basic

$              0.91

$              0.65

Diluted

$              0.89

$              0.63

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

Basic

2,746

2,695

Diluted

2,817

2,746

(1)

We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2023, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. Movements in international currencies relative to the United States dollar during the three months ended November 30, 2023 compared with the corresponding prior year period increased our total revenues by 1 percentage point, total operating expenses by 1 percentage point and operating income by 3 percentage points.

ORACLE  CORPORATION

Q2 FISCAL 2024 FINANCIAL RESULTS

RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)

($ in millions, except per share data)

Three Months Ended November 30,

% Increase
(Decrease)
in US $

% Increase
(Decrease) in
Constant
Currency (2)

2023

2023

2022

2022

GAAP

Non-GAAP

GAAP

Non-GAAP

GAAP

Adj.

Non-GAAP

GAAP

Adj.

Non-GAAP

TOTAL REVENUES

$  12,941

$           -

$  12,941

$  12,275

$           -

$  12,275

5 %

5 %

4 %

4 %

TOTAL OPERATING EXPENSES

$     9,319

$   (1,914)

$     7,405

$     9,204

$   (2,015)

$     7,189

1 %

3 %

0 %

2 %

     Stock-based compensation (3)

1,029

(1,029)

-

909

(909)

-

13 %

*

13 %

*

     Amortization of intangible assets (4)

755

(755)

-

907

(907)

-

(17 %)

*

(17 %)

*

     Acquisition related and other

47

(47)

-

62

(62)

-

(23 %)

*

(24 %)

*

     Restructuring

83

(83)

-

137

(137)

-

(39 %)

*

(42 %)

*

OPERATING INCOME

$     3,622

$     1,914

$     5,536

$     3,071

$     2,015

$     5,086

18 %

9 %

15 %

7 %

OPERATING MARGIN %

28 %

43 %

25 %

41 %

297 bp.

135 bp.

266 bp.

121 bp.

INCOME TAX EFFECTS (5)

$        217

$        655

$        872

$        403

$        444

$        847

(46 %)

3 %

(48 %)

1 %

NET INCOME

$     2,503

$     1,259

$     3,762

$     1,741

$     1,571

$     3,312

44 %

14 %

39 %

11 %

DILUTED EARNINGS PER SHARE

$       0.89

$       1.34

$       0.63

$       1.21

40 %

11 %

35 %

9 %

DILUTED WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING

2,817

-

2,817

2,746

-

2,746

3 %

3 %

3 %

3 %

(1)

This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see Appendix A.

(2)

We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2023, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods.

(3)

Stock-based compensation was included in the following GAAP operating expense categories:

Three Months Ended

Three Months Ended

November 30,
 2023

November 30,
 2022

GAAP

Adj.

Non-GAAP

GAAP

Adj.

Non-GAAP

     Cloud services and license support

$        137

$      (137)

$           -

$        113

$      (113)

$           -

     Hardware

6

(6)

-

5

(5)

-

     Services

45

(45)

-

35

(35)

-

     Sales and marketing

174

(174)

-

151

(151)

-

     Research and development

573

(573)

-

510

(510)

-

     General and administrative

94

(94)

-

95

(95)

-

           Total stock-based compensation

$     1,029

$   (1,029)

$           -

$        909

$      (909)

$           -

(4)

Estimated future annual amortization expense related to intangible assets as of November 30, 2023 was as follows:

     Remainder of fiscal 2024

$     1,488

     Fiscal 2025

2,303

     Fiscal 2026

1,639

     Fiscal 2027

672

     Fiscal 2028

635

     Fiscal 2029

561

     Thereafter

1,080

           Total intangible assets, net

$     8,378

(5)

Income tax effects were calculated reflecting an effective GAAP tax rate of 8.0% and 18.8% in the second quarter of fiscal 2024 and 2023, respectively, and an effective non-GAAP tax rate of 18.8% and 20.4% in the second quarter of fiscal 2024 and 2023, respectively. The difference in our GAAP and non-GAAP tax rates in each of the second quarter of fiscal 2024 and 2023 was primarily due to the net tax effects related to stock-based compensation expense; acquisition related and other items, including the tax effects on amortization of intangible assets; and restructuring expense, partially offset by the net deferred tax effects related to an income tax benefit that was previously recorded due to the partial realignment of our legal entity structure.

*

Not meaningful

ORACLE CORPORATION

Q2 FISCAL 2024 YEAR TO DATE FINANCIAL RESULTS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

($ in millions, except per share data)

Six Months Ended November 30,

% Increase

% Increase

(Decrease)

% of

% of

(Decrease)

in Constant

2023

Revenues

2022

Revenues

in US $

Currency (1)

REVENUES

Cloud services and license support

$         19,186

75 %

$         17,015

72 %

13 %

11 %

Cloud license and on-premise license

1,987

8 %

2,339

10 %

(15 %)

(16 %)

Hardware

1,470

6 %

1,613

7 %

(9 %)

(10 %)

Services

2,751

11 %

2,753

11 %

0 %

(1 %)

      Total revenues

25,394

100 %

23,720

100 %

7 %

6 %

OPERATING EXPENSES

Cloud services and license support

4,452

18 %

3,626

15 %

23 %

22 %

Hardware

432

2 %

536

2 %

(19 %)

(21 %)

Services

2,465

10 %

2,233

9 %

10 %

9 %

Sales and marketing

4,118

16 %

4,393

19 %

(6 %)

(7 %)

Research and development

4,442

17 %

4,251

18 %

4 %

4 %

General and administrative

769

3 %

777

3 %

(1 %)

(2 %)

Amortization of intangible assets

1,518

6 %

1,826

8 %

(17 %)

(17 %)

Acquisition related and other

58

0 %

103

1 %

(43 %)

(43 %)

Restructuring

222

1 %

281

1 %

(21 %)

(22 %)

      Total operating expenses

18,476

73 %

18,026

76 %

2 %

2 %

OPERATING INCOME

6,918

27 %

5,694

24 %

22 %

19 %

Interest expense

(1,760)

(7 %)

(1,643)

(7 %)

7 %

7 %

Non-operating expenses, net

(63)

0 %

(251)

(1 %)

(75 %)

(76 %)

INCOME BEFORE INCOME TAXES

5,095

3,800

16 %

34 %

30 %

Provision for income taxes

172

1 %

511

2 %

(66 %)

(68 %)

NET INCOME

$           4,923

19 %

$           3,289

14 %

50 %

45 %

EARNINGS PER SHARE:

Basic

$              1.80

$              1.22

Diluted

$              1.75

$              1.20

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

Basic

2,737

2,690

Diluted

2,820

2,747

(1)

We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2023, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods. Movements in international currencies relative to the United States dollar during the six months ended November 30, 2023 compared with the corresponding prior year period increased our total revenues by 1 percentage point and operating income by 3 percentage points.

Q2 FISCAL 2024 YEAR TO DATE FINANCIAL RESULTS

RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)

($ in millions, except per share data)

Six Months Ended November 30,

% Increase
(Decrease)
in US $

% Increase
(Decrease)
in Constant
Currency (2)

2023

2023

2022

2022

GAAP

Non-GAAP

GAAP

Non-GAAP

GAAP

Adj.

Non-GAAP

GAAP

Adj.

Non-GAAP

TOTAL REVENUES

$  25,394

$           -

$  25,394

$  23,720

$           -

$  23,720

7 %

7 %

6 %

6 %

TOTAL OPERATING EXPENSES

$  18,476

$   (3,676)

$  14,800

$  18,026

$   (3,869)

$  14,157

2 %

5 %

2 %

4 %

     Stock-based compensation (3)

1,878

(1,878)

-

1,659

(1,659)

-

13 %

*

13 %

*

     Amortization of intangible assets (4)

1,518

(1,518)

-

1,826

(1,826)

-

(17 %)

*

(17 %)

*

     Acquisition related and other

58

(58)

-

103

(103)

-

(43 %)

*

(43 %)

*

     Restructuring

222

(222)

-

281

(281)

-

(21 %)

*

(22 %)

*

OPERATING INCOME

$     6,918

$     3,676

$  10,594

$     5,694

$     3,869

$     9,563

22 %

11 %

19 %

9 %

OPERATING MARGIN %

27 %

42 %

24 %

40 %

324 bp.

141 bp.

293 bp.

128 bp.

INCOME TAX EFFECTS (5)

$        172

$     1,478

$     1,650

$        511

$     1,018

$     1,529

(66 %)

8 %

(68 %)

6 %

NET INCOME

$     4,923

$     2,198

$     7,121

$     3,289

$     2,851

$     6,140

50 %

16 %

45 %

14 %

DILUTED EARNINGS PER SHARE

$       1.75

$       2.53

$       1.20

$       2.24

46 %

13 %

41 %

11 %

DILUTED WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING

2,820

-

2,820

2,747

-

2,747

3 %

3 %

3 %

3 %

(1)

This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see Appendix A.

(2)

We compare the percent change in the results from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rates in effect on May 31, 2023, which was the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods.

(3)

Stock-based compensation was included in the following GAAP operating expense categories:

Six Months Ended

Six Months Ended

November 30,2023

November 30, 2022

GAAP

Adj.

Non-GAAP

GAAP

Adj.

Non-GAAP

     Cloud services and license support

$        248

$      (248)

$           -

$        204

$      (204)

$           -

     Hardware

11

(11)

-

9

(9)

-

     Services

78

(78)

-

60

(60)

-

     Sales and marketing

309

(309)

-

275

(275)

-

     Research and development

1,057

(1,057)

-

932

(932)

-

     General and administrative

175

(175)

-

179

(179)

-

           Total stock-based compensation

$     1,878

$   (1,878)

$           -

$     1,659

$   (1,659)

$           -

(4)

Estimated future annual amortization expense related to intangible assets as of November 30, 2023 was as follows:

     Remainder of fiscal 2024

$     1,488

     Fiscal 2025

2,303

     Fiscal 2026

1,639

     Fiscal 2027

672

     Fiscal 2028

635

     Fiscal 2029

561

     Thereafter

1,080

           Total intangible assets, net

$     8,378

(5)

Income tax effects were calculated reflecting an effective GAAP tax rate of 3.4% and 13.4% in the first half of fiscal 2024 and 2023, respectively, and an effective non-GAAP tax rate of 18.8% and 19.9% in the first half of fiscal 2024 and 2023, respectively. The difference in our GAAP and non-GAAP tax rates in each of the first half of fiscal 2024 and 2023 was primarily due to the net tax effects related to stock-based compensation expense; acquisition related and other items, including the tax effects on amortization of intangible assets; and restructuring expense, partially offset by the net deferred tax effects related to an income tax benefit that was previously recorded due to the partial realignment of our legal entity structure.

Not meaningful

ORACLE  CORPORATION

Q2 FISCAL 2024 FINANCIAL RESULTS

CONDENSED CONSOLIDATED BALANCE SHEETS

($ in millions)

November 30,

May 31,

2023

2023

ASSETS

Current Assets:

Cash and cash equivalents

$                 8,244

$                 9,765

Marketable securities

446

422

Trade receivables, net

6,804

6,915

Prepaid expenses and other current assets

3,795

3,902

     Total Current Assets

19,289

21,004

Non-Current Assets:

   Property, plant and equipment, net

18,009

17,069

   Intangible assets, net

8,378

9,837

   Goodwill, net

62,231

62,261

   Deferred tax assets

12,758

12,226

   Other non-current assets

13,659

11,987

     Total Non-Current Assets

115,035

113,380

TOTAL ASSETS

$            134,324

$            134,384

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

Notes payable and other borrowings, current

$                 6,321

$                 4,061

Accounts payable

1,107

1,204

Accrued compensation and related benefits

1,706

2,053

Deferred revenues

8,878

8,970

Other current liabilities

6,395

6,802

     Total Current Liabilities

24,407

23,090

Non-Current Liabilities:

Notes payable and other borrowings, non-current

82,468

86,420

Income taxes payable

10,046

11,077

Deferred tax liabilities

5,244

5,772

Other non-current liabilities

7,781

6,469

     Total Non-Current Liabilities

105,539

109,738

       Stockholders' Equity

4,378

1,556

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$            134,324

$            134,384

     ORACLE  CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in millions)

Six Months Ended
November 30,

Cash Flows From Operating Activities:

Net income

$        4,923

$        3,289

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation

1,510

1,138

Amortization of intangible assets

1,518

1,826

Deferred income taxes

(1,049)

(852)

Stock-based compensation

1,878

1,659

Other, net

331

289

Changes in operating assets and liabilities, net of effects from acquisitions:

Decrease in trade receivables, net

145

516

Decrease in prepaid expenses and other assets

301

121

Decrease in accounts payable and other liabilities

(1,048)

(785)

Decrease in income taxes payable

(1,541)

(327)

Increase in deferred revenues

149

369

Net cash provided by operating activities

7,117

7,243

Cash Flows From Investing Activities:

Purchases of marketable securities and other investments

(515)

(603)

Proceeds from sales and maturities of marketable securities and other investments

157

462

Acquisitions, net of cash acquired

(59)

(27,799)

Capital expenditures

(2,394)

(4,154)

Net cash used for investing activities

(2,811)

(32,094)

Cash Flows From Financing Activities:

Payments for repurchases of common stock

(600)

(1,000)

Proceeds from issuances of common stock

426

661

Shares repurchased for tax withholdings upon vesting of restricted stock-based awards

(1,733)

(895)

Payments of dividends to stockholders

(2,190)

(1,723)

Proceeds from issuances of commercial paper, net of repayments

1,749

1,880

Proceeds from issuances of senior notes and other borrowings, net of issuance costs

-

28,280